Financial Markets Daily Report
25 November 2022

Financial markets extended gains during a session characterized by low trading volumes, due to the Thanksgiving holiday in the US. The key theme remained expectations for a slowdown in the pace of monetary policy tightening by major central banks, after a dovish reading of the accounts of the last Fed meeting.

FMDR
  • Financial markets extended gains during a session characterized by low trading volumes, due to the Thanksgiving holiday in the US. The key theme remained expectations for a slowdown in the pace of monetary policy tightening by major central banks, after a dovish reading of the accounts of the last Fed meeting.
  • The minutes of the last ECB meeting also revealed that “a few” officials favored a smaller rate increase in October but that, at the end, 75 bp were judged to be appropriate in view of the protracted period of high inflation. In this vein, ECB Board member Isabel Schnabel argued yesterday that it may be premature to reduce the pace of rate hikes.
  • In this context, equity prices ticked higher while sovereign bond yields fell, more notably for the eurozone periphery, sending the risk premium in the 10-year Italian bond (versus Germany) near 180 bp, the lowest level since the spring. 
  • Elsewhere, oil prices hovered around recent levels while natural gas prices fell modestly.
     
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